Cambridge ditches standard electric service to embrace green power

Two weeks ago Cambridge joined a growing number of cities and towns that have negotiated new electric contracts for their residents to boost renewable energy use in Massachusetts, bypassing the basic service offered by utilities such as Eversource and National Grid.

The practice is called municipal aggregation.

“Traditionally, it’s been much more used as a practice to achieve savings and provide much more price stability,” said Cammy Peterson, director of clean energy at the Metropolitan Area Planning Council. “The innovation is that piece where they’re also using it as a tool to advance renewable energy in a supply.”

Cambridge officials see the opportunity as a way to further the city’s commitment to the environment and net-zero.

“Some communities have done this to lower prices, but many are doing aggregation for the same reasons: to also increase renewable energy,” said Susanne Rasmussen, director of environmental and transportation planning in Cambridge. “And that fits in with our overall climate goals to get to carbon neutrality by mid-century.”

Massachusetts regulations require renewables make up at least 12 percent of the statewide energy portfolio. Cambridge chose to use 25 percent more solar energy than required by the state.

“We chose solar because we would like to stimulate local renewable energy projects to happen. In Cambridge, the only renewable energy is solar because we can’t have hydro or windmill projects,” said Rasmussen.

Melrose was among the first Massachusetts communities to use municipal aggregation. Its plan, which went into effect last January, mandates renewable sources be used to generate at least 17 percent of the electricity coming into the town.

Martha Grover, energy efficiency manager for Melrose, said she has recently fielded calls from several communities considering similar plans.

Dedham launched its own program last year. Eight other communities -- Arlington, Brookline, Gloucester, Hamilton, Millis, Somerville, Sudbury and Winchester -- are currently working with the MAPC to launch their own green municipal aggregation programs.

According to the MAPC, which helped Melrose develop its plan, residents saved an average of $23 per household on their electric bills, or $200,000 citywide in the first year of the program. The amount of additional renewable energy purchased was the equivalent of adding a new, local 1-megawatt wind turbine.

How the process works

Utility providers such as National Grid and Eversource operate the power lines that deliver electricity to homes, but they don’t produce the power. Instead, they negotiate rates for their customers with third-party suppliers and then charge a delivery fee. The process is referred to as “basic service.”

While most residential and small business customers opt for basic service, Massachusetts law allows residents the option of signing a contract with any licensed power supplier.

Using the power of bulk purchasing, some cities and towns have decided to negotiate contracts with suppliers on behalf of all their residents in an effort to secure lower, more-stable rates.

After a competitive bidding process that began in March, Cambridge chose Agera Energy as its supplier. Companies were asked to submit actual bids in mid-May after the Eversource summer price had been published, which enabled the city to select a bidder whose price was lower than Eversource's, according to Rasmussen.

Risk vs. reward?

Municipal aggregation does not come without risks. There is no guarantee that the rates will remain lower than the basic service rates offered by National Grid, Eversource and other utilities.

However, customers can opt out at any time, either returning to basic service or securing their own contracts.

“The program is an opt out program, which means we enroll everyone. If they don’t want to be a part of it, they can opt out at any time at no cost. But you’re automatically enrolled,” said Rasmussen.

The Cambridge Community Development Department will begin outreach to residents in June, with aggregation starting in July. Rasmussen said residents will have the chance to opt out before the start if they don’t like what they hear.

Since the city signed an 18-month contract for this power, and the electricity rates are already lower than Eversource’s current rates, Rasmussen said she expects to see savings. Even if rates are lower for 6 to 12 months and then increase for the last sixth months, residents are still seeing 12 months of savings that offset that increase, she said.

“We have high confidence that it’ll be lower on average over the entire 18 months, but it isn’t a guarantee. They’ll be publishing their rates every 6 months so if [residents] don’t want to continue, they can opt out,” she said.

Rasmussen also said those who are currently enrolled in fuel assistance and low-income delivery rates will continue to receive those benefits.

The next wave

Peterson said she expects the number of communities inserting renewable energy clauses into their municipal aggregation contracts to increase in the coming years, potentially launching a new trend.

“It really is just a handful getting off the ground, but it’s scaling up pretty quickly,” she said.

Once the additional eight plans are up and running, the MAPC projects the collective impact could equal the equivalent of 17 new, local 1-megawatt wind turbines. Increased demand for local renewable power will lead to more renewable energy infrastructure being built, Peterson said.

The green aggregation programs automatically enroll residents into a default level of service. Residents can then select from a series of options with varying renewable energy components, ranging from the state minimum level to having 100 percent of their power come from renewable sources. Generally, higher renewable components come with higher rates on customers’ bills.

Somerville, which has been working on developing a green aggregation plan since 2005, plans to launch its program this summer as well. Its plan received final approval from state regulators in April.

“That has a pretty big impact when you put all 80,000 Somerville residents together,” said Oliver Sellers-Garcia, director of the Somerville Office of Sustainability and Environment.